Friday, September 13, 2013
On Thursday Twitter announced via a tweet that they had confidentially filed their S-1 documents with the Securities and Exchange Commission for a planned initial public stock offering. Twitter, with 200 million users, is the currently most highly anticipated consumer Internet IPO. The excitement surrounding the Twitter IPO will be the largest since Facebook went public in May 2012. For investors looking to get in on the action here is what you need to know.
As Forbes explains, under SEC rules established in the JOBS Act passed last year, companies defined as “emerging growth companies” can file their S-1′s confidentially if their annual revenue is less than $1 billion.
Companies do not have to make their documents public until 21 days before the company goes on the “road show” to pitch the company to big investors on Wall Street for the IPO. The documents remain completely shielded from public until then.
Despite the confidential filing, this does signal that Twitter is making less than $1 billion in annual revenue. That’s generally in line with third party estimates. EMarketer in March estimated Twitter’s revenue at $582 million this year and close to $1 billion in 2014.
Just last week, Twitter acquired mobile ad exchange company MoPub for $350 million in stock, showing the much larger advertising ambitions beyond its promoted Tweets. MoPub offers ad services on a variety of publishers’ apps beyond Twitter.
However, investors are still waiting for details on how many shares of the social media company will be offered, the timing of the offering and the price of the shares. Typically, much-anticipated IPOs are doled out by the investment bankers running the deal to favored clients and long-standing customers. Individual investors interested in buying shares usually have to purchase them in the open market once trading begins. But experts are thinking Twitter may likely follow the lead set by Facebook and other recent IPOs in holding back some shares for individual investors. With most recent IPOs, there will usually be about 20% of the shares outstanding held back for individual investors, says Jay Ritter, professor of finance at the University of Florida.
Interested investors will need to check with their brokerages over the coming months to see how many shares, if any, will be available to them. Most large online brokerages have deals with underwriters that allow them to get allocations to certain IPOs.
More details will be revealed after Twitter officially files its IPO registration statement for the public to see, possibly as early as November.
Fast Facts about Twitter
Twitter was founded 2006 by Jack Dorsey, Biz Stone and Evan Williams.
In the first hour of @Twitter sending their IPO announcement tweet, 7,872 people retweeted the message.
Twitter soared to popularity in 2007 at the South By Southwest Interactive festival in Austin, Texas.
A billion tweets are sent every two and a half days. That's three for every man, woman and child in the U.S.
The 2013 Superbowl performance by Beyonce had 268 million tweets per minute, more than any other event in past two years.